Ofgem CEO Jonathan Brearley has urged UK energy suppliers to “learn the lessons of the energy crisis”. In an open letter, the regulator stated it “expects suppliers to act responsibly and in the interests of their customers” as the retail energy sector is forecast to profit for the first time since 2018.
The letter sternly warns suppliers to ensure they absorb potential losses and meet the regulator’s new capital requirements. Brearley added: “I expect no return to paying out dividends before a supplier has met those essential capital requirements”.
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Alongside these warnings, Ofgem has summarised its plans to protect consumers, including a continued review of the price cap formula and plans to ensure pre-payment meter customers pay no more than those billed by direct debit. The regulator is also “considering whether suppliers should be required to publish all their domestic tariffs to provide customers and third-party intermediaries with complete transparency”.
Ofgem reaffirmed its commitment to supporting businesses facing high energy prices, stating that it is “working closely with suppliers and trade bodies” to create flexible pricing arrangements for small businesses. However, while the regulator said it was “observing some good practice”, it has found “evidence that some suppliers may have breached our pricing rules”, which it is “investigating further”.
“Protecting the interests of consumers”
Criticisms were also levelled at UK energy suppliers, with the letter noting that overall domestic consumer satisfaction with energy supplier customer service fell by 8% between Q4 2018 and Q4 2022. Consumers have also been facing increasing difficulties in contacting their suppliers, with only 58% reporting the process as “easy” or “very easy”.
Worryingly, the letter notes that many customers in energy debt do not have a debt repayment plan in place, a concerning issue given that Ofgem predicts “it is likely that a large group of customers will struggle to pay their bills” this winter if prices remain as forecast.
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By GlobalDataHowever, the regulator states that it is “focused on protecting the interests of consumers”, adding that it “will continue to work closely with government, consumer groups and the energy industry to support energy customers, particularly the most vulnerable”.
